The MFS Diversified Group has made a $209.16 million off-market takeover bid for Villa World.
MFT currently holds approximately 1.4% interest in Villa World and will buyout the remaining 98.6% for $1.80 per share, comprising one new MFT stapled security plus 80 cents for each Villa World share, which is adjustable if Villa World decides to pay a special dividend prior to the merger.
Existing Villa World shareholders will own approximately 59% of the merged group.
The newly merged entity will have approximately $610 million in total assets and $200 in net assets.
Following the merger, MFT will have 47 properties in its portfolio diversified across offices, industrial and retail properties located throughout Australia.
In addition, MFT will boost its share in the aged care sector with 23 Village Life retirement villages and a 70% stake in the Guardian Group, an aged care operator with over 500 beds.
MFT will also have a 50% interest Eynesbury Station, a master planned community comprising 2,900 residential lots plus commercial precincts and golf course located in the Melton shire to the west of Melbourne with an expected completion date beyond 2020.
“MFT and Villa World are an excellent fit. The two groups have complementary assets and skill bases and both have a successful track record,” MFT’s chief executive Craig White said.
“The proposed transaction has the potential to create a fully integrated diversified property group with an attractive investment portfolio and the opportunity to pursue multiple avenues of growth across a range of sectors. The merged group will become a larger and more significant member of the listed property sector.” he added.
“The combined company will deliver value through greater earnings diversification, a broader product offering and operational synergies,” Villa World CEO Brent Hailey said.
“The combination of MFT and Villa World will create a well-diversified company with significant expertise in property investment and development while the merged company’s ability to capture future growth opportunities will be significantly enhanced,” Hailey added.
The board of Villa World has unanimously recommend that Villa World shareholders accept the MFT offer and have indicated that the directors of Villa World intend to accept the proposed offer for their own holdings of Villa World shares.
Meanwhile, Villa World has undertaken not to solicit any other competing proposals or otherwise be liable to pay a break fee of $1.8 million to MFT in certain circumstances if the merger is not implemented.
The proposed new Boards of MFT will comprise 3 nominees of MFS plus 3 nominees of Villa World.
White will remain as chief executive of MFS Limited, while Hailey, currently chief executive of Villa World will become chief executive of MFT.
The chairman will be selected by MFS.
MFT and Villa World expect that subject to the preconditions being satisfied or waived that the MFT Offer will be made within 6 weeks of this announcement.
By Nelson Yap